Sales Growth Expected

12/19/2011 12:01:00 AM Eastern

By: By TWICE Staff

TWICE:How did component-audio sales fare at the
retail level in 2011? What’s the outlook for 2012?

Russ Johnston, Pioneer: In 2010, A/V receivers
came off a tremendous year, growing 14 percent in
units, a level that eclipsed 2008 levels. So far through
September 2011, we are realizing growth again at a
level of 9 percent year to date. 2010 was a banner year
because of the influx of new technology such as HDMI
1.4a, which was essential, as was 3D and iPhone connectivity
and Ethernet-connected services.

For 2011, most of the growth is coming from price points under $600 from the trickle-down of technology
and the new functionality of AirPlay. The over-$600 receiver
market was down 3 percent in 2010 and is tracking
down this year again by12 percent year-to-date.
The main cause of this is economic pressure on the
consumer and the retail community. Traditional brickand-
mortar is still tightening. Pioneer has lost Ultimate
Electronics and now Sixth Ave., both of which were significant
players in the specialty channel.

Tim Bailey, D&M: We are pleased to report that the
D&M brands fared quite well in 2011 despite significant
challenges faced by the industry, including the general
state of the global economy and the slowdown in manufacturing
due to the earthquake in Japan.

Both retail and online sales increased year over year
in a majority of key categories, including component
audio, which was up substantially. We were especially
heartened by the uptick in the custom-installation business,
particularly for the Denon and Marantz brands, as
well as the growing strength of online sales across all
D&M brands.

With so many factors in play, it’s difficult to make predictions
about 2012. However, we expect that the D&M
brands will continue to buck the trend and grow with
strong feature sets and new product categories. Still,
based on the fragility of the economic resurgence, we
all have our work cut out for us.

Steve Feinstein, Atlantic Technology: Component
sales in 2011 were down slightly from 2010. This
is attributable, in our view, to the still-sluggish economy
that has limited discretionary non-essential purchases
in all categories (not just electronics), and also to the diminishing
number of specialty electronics retailers who
have meaningful demonstration capabilities.

Our industry — quality audio— depends on the ability
of consumers to be able to hear and understand the
differences and advantages of good equipment. The
national “big box” retail stores have very limited demonstration
capability and a salesforce that isn’t trained
to explain subtle differences in audio equipment design.
Customers are pretty much on their own when
it comes to trying to figure out the differences/advantages
of one brand over another, and this negatively impacts our industry.

Doug Henderson, The B&W Group: We saw solid
growth from 2010 levels. Our growth was driven by new
products, distribution changes and market-share gains.
That said, we believe the overall business environment
remains very challenging. We expect to continue to see
moderate to strong growth in 2012.

Paul Wasek, Onkyo: Sales of component audio
were strong in 2011 in both units and dollars compared
to 2010. A slight rebound in the economy helped, but
we believe a major factor was the consumer looking to
upgrade their audio to be more in-line with the video in
their home. We’re optimistic that an improved economy
will help keep component-audio sales strong for 2012.